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Viewing cable 09BOGOTA1431, COLOMBIAN-VENEZUELA TRADE SLUMPS AS TRADE

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Reference ID Created Released Classification Origin
09BOGOTA1431 2009-05-05 17:43 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Bogota
VZCZCXYZ0002
RR RUEHWEB

DE RUEHBO #1431/01 1251743
ZNR UUUUU ZZH
R 051743Z MAY 09 ZDK
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 8568
INFO RUEHBR/AMEMBASSY BRASILIA 8842
RUEHCV/AMEMBASSY CARACAS 2153
RUEHLP/AMEMBASSY LA PAZ MAY LIMA 7458
RUEHZP/AMEMBASSY PANAMA 3530
RUEHQT/AMEMBASSY QUITO 8191
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS BOGOTA 001431 
 
SENSITIVE 
SIPDIS 
 
WHA/AND, WHA/EPSC 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PREL CO
SUBJECT: COLOMBIAN-VENEZUELA TRADE SLUMPS AS TRADE 
AGREEMENT TALKS GO NOWHERE, SLOW 
 
REF: A. CARACAS 492 
     B. BOGOTA 1270 
     C. BOGOTA 378 
 
1. (SBU) SUMMARY.  Following two years of banner growth for 
Colombian exports to Venezuela, 2009 will likely see a 
significant contraction in bilateral trade due to the global 
downturn.  The GOC continues to be frustrated in its attempts 
to engage Venezuela on some sort of agreement to govern 
bilateral economic relations once Venezuela's CAN commitments 
expire in 2011.  While second to the U.S. in overall 
Colombian exports, Venezuela is by far Colombia's largest 
export market for non-traditional goods (with a higher 
value-added content), making the downturn in trade 
particularly painful for a Colombian economy on the verge of 
recession and experiencing increased unemployment.  Recent 
meetings between the two sides have produced cordial words 
and little of substantive importance to the bilateral trade 
relationship.  END SUMMARY. 
 
COLOMBIAN-VENEZUELAN TRADE, BY THE NUMBERS 
------------------------------------------ 
 
2. (SBU) Colombian exports to Venezuela increased by a 
whopping 96 percent in 2007 to over $5 billion and by 17 
percent in 2008 to $6 billion.  Venezuelan exports to 
Colombia, on the other hand, fell slightly, from $1.5 billion 
in 2006 to $1.2 billion in 2008.  Roberto Cajamarca, Director 
of Economic Studies for the Colombian-Venezuelan Chamber of 
Commerce, noted that Colombian exports to Venezuela in 
January fell 11.6 percent and predicted a 25 percent decline 
in total 2009 exports to Venezuela.  He also predicted a 
decrease in Colombian imports from Venezuela. 
 
3. (SBU) Venezuela bought 16 percent of Colombia's global 
exports in 2008, second only to the U.S. (37 percent). 
Venezuela is by far the largest importer of non-traditional 
Colombian exports, which have a higher value-added content. 
With March unemployment in Colombia reaching 12 percent and 
signs of recession increasingly evident (Ref B), the decrease 
in exports is unwelcome news for Colombia.  In addition to 
the global economic downturn's impact on Venezuela's 
purchasing power, Cajamarca pointed out that Venezuelan 
Government impediments to preferential exchange rate dollars 
translates into a "de facto devaluation" in Venezuela will 
further sink Colombian exports, such as textiles, machinery 
and plastics. 
 
BILATERAL MEETINGS: GREAT FOR OPTICS, LIGHT ON SUBSTANCE 
--------------------------------------------- ----------- 
 
4. (SBU) Presidents Uribe and Chavez met in Cartagena in 
January (Ref C) and in Caracas in April (Ref A).  Both 
meetings were cordial, but produced little concrete results. 
The most important outcome of the April 14 meeting for 
Colombia was Venezuela's issuance of import licenses for 
10,000 Colombian vehicles.  While this number is less than 
the 15,000 Colombia was permitted to export in 2008 and far 
inferior to the 45,000 vehicles Colombia exported to 
Venezuela in 2007 before quotas were introduced, 
Colombian-Venezuelan Chamber of Commerce President Magdalena 
Pardo acknowledged that "10,000 vehicles is much better than 
zero, which is how many Colombia exported to Venezuela in the 
first three months of the year."  Pardo said that the vehicle 
quota, like the $260 million in delayed payments to Colombian 
exporters were a product of Venezuelan bureaucracy and 
economic policies, and not discriminatory against Colombia. 
 
5. (SBU) The other results of the April 14 meeting were 
memoranda of understanding and letters of intent in the 
following areas: electricity distribution from Puerto Inirida 
(Colombia) to San Fernando de Atabapo (Venezuela); bilateral 
export/import credits for small and medium enterprises, as 
laid out during their January meeting; agreement to conduct 
bilateral trade in local currencies vice dollars; and 
promoting bi-national transportation, health, environment, 
education, agriculture, energy and infrastructure projects. 
Chavez made public comments at the January Cartagena Summit 
that he wanted to see bilateral trade reach $10 billion in 
2009.  While no one in the Colombian business community 
believes that will happen, they acknowledge the importance of 
such statements in dealing with a Venezuelan Government that 
 
relies heavily on the President's guidance. 
 
NO PROGRESS ON AGREEMENT TO REPLACE CAN 
--------------------------------------- 
 
6. (SBU) GOC trade officials remain frustrated by Venezuela's 
lack of engagement on an agreement to govern bilateral trade 
once Venezuela's commitments under the Andean Community (CAN) 
expire in April 2011.  Colombia submitted a draft agreement 
in March, but has yet to receive an answer from Venezuela. 
One senior GOC trade official described interactions with the 
Venezuelans on this issue in the following manner: "Gabriel 
Garcia Marquez could not script these meetings any better. 
They epitomize magical realism -- what happens when a highly 
detailed, realistic setting is invaded by something too 
strange to believe." 
BROWNFIELD